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Russian fund can invest in Fannie Mae bonds
Russia can invest in Fannie Mae and Freddie Mac bonds through its sovereign wealth funds as part of a plan to diversify its holdings, the finance ministry said.
- Bloomberg
- Published: 01:05 February 23, 2008
Moscow: Russia can invest in Fannie Mae and Freddie Mac bonds through its sovereign wealth funds as part of a plan to diversify its holdings, the finance ministry said.
Officials allowed investment from the Reserve Fund and National Wellbeing Fund into bonds issued by 15 government-linked agencies from the US, UK, Germany, France, Austria, Canada and the Netherlands, including those of Fannie Mae and Freddie Mac, two of the largest sellers of agency debt, a spokeswoman for the ministry said.
"We want to diversify the investments, increase the income and keep a conservative approach," said Roman Shiyko, head of the finance ministry funds' management division.
Russia's decision to buy Fannie Mae and Freddie Mac debt and other countries' securities illustrates its desire to broaden its holdings and bolster returns. Inflation in Russia was 11.5 per cent last year, with the government attempting to meet an 8.5 per cent target in 2008. The ruble appreciated 6.4 per cent against the dollar last year.
Freddie Mac issued $4 billion of two-year notes at the highest yield over similar-maturity Treasuries in at least four years. The notes were priced to yield 2.892 per cent, 70 basis points, or 0.7 percentage point, more than government notes.
The government "picked the option that will help counter inflation", by not investing the funds at home, said Nikolay Kascheev, an economist with VTB Group in Moscow, Russia's second-biggest lender.
Shiyko said that 15 per cent of each of the funds was being invested in the bonds on the list, approved by the ministry in January.
He did not say how much was allocated to specific issuers.
The list included bonds issued by a French affiliate of Belgium's Dexia Group and the UK's Network Rail MTN Finance.
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